EIU affirms Vietnam’s promising economic growth prospects

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The EIU said after several years of achieving low economic growth, the Vietnamese economy has showed signs of recovery with increasing investment in the manufacturing sector. Although there remain shortcomings in terms of macro-economic instability, Vietnam’s competitive capacity has renewed optimism about its economic growth in 2014 thanks to a sharp rise in foreign direct investment and export turnover.

The Communist Party of Vietnam is fully aware of the need to pay due attention to job training for young labourers and improving people’s living standards along with maintaining political stability.   

One of the first measures taken by the Vietnamese Government is to increase the maximum salary since the beginning of 2013. The next pay rise will come soon when inflation is well under control.

The foreign-invested sector in Vietnam has continued to generate jobs with more FDI inflows in the electronics and assembly industry, helping Vietnam produce highly valued products. Many companies like Panasonic, JBL, Fuji Xerox and Nokia have poured millions of dollars into their projects in Vietnam. Especially, Samsung group from the Republic of Korea (RoK) is expected to invest up to US$2 billion in building a plant in the northern province of Bac Ninh.

Meanwhile, some the world’s leading retailers also want to penetrate the potential market. France’s Auchan retail group has a plan to come back to Vietnam in 2014 with an estimated capital of US$500 million for operation in the next ten years.

Vietnam has attracted many investors in the manufacturing sector for exports as the country has advantages over other nations in the region in terms of transport infrastructure, input materials and finished products.

Vietnam also has a wide network of electricity supplies to provide power for 90 percent of its population.

The growing investment in highly-valued industries shows that Vietnam’s diverse export activities can maintain a high pay rise for laborers. In the future, the Trans-Pacific Partnership (TPP) which involves the US and some Asia-Pacific nations will bring privileges to Vietnamese exporters, including an easy access to high-income markets. The growth rate is forecast at 5.3 percent this year and the Vietnam National Assembly has agreed to set the rate of economic growth at 5.3 percent in the coming years.

With signs of improvement in manufacturing and business, as well as in the foreign invested sector, there is high hope about Vietnam’s economic growth in the next year despite risks which might be caused by bad debts in the banking sector.